Impact evaluation

Impact evaluation is the process of comparing achieved and potential outcomes against the thesis for investment. Below are some ideas about what evaluation might look like:

For early-stage or generalist investors where objectives are around number of impact companies supported and graduation rates:

1. Justification for why a company meets the fund's definition of an impact startup

2. Number of impact startups backed

3. Number of impact startups graduating to secure further funding from a new lead investor

For thematic investors where objectives are around specific outcomes:

1. Degree to which outcomes are being achieved against targets set

For impact investors that did not have specific outcome-based targets but want to say more about outcomes created:

1. A case study approach at startup level is a useful approach

2. The power law applies to impact as it does to returns (ie minority of companies responsible for majority of impact returns)

3. Therefore, it makes sense to focus on the companies that are outperforming in terms of financial and impact performance

As evaluation is often a sensitive discussion between GPs and their investees, we are not aware of any public examples to share. We believe increased transparency on this front is ultimately useful, although we recognise there are some tensions and challenges that have to be thought through carefully.